This Manuscript was accepted and published in the journal Computational and Mathematical Organization Theory. Please do not consider it for another type of publication. Cite this article as: Paredes-Frigolett, H., Nachar-Calderón, P. & Marcuello, C. Comput Math Organ Theory (2016). doi:10.1007/s10588-016-9219-z
Abstract
Cooperative firms and the behavior of their members have been extensively studied following neoclassical economic approaches that base their analysis on the characteristics and behavior of the capitalist firm and its owners (McCain 2008; Borgen 2004). This literature has identified a number of disadvantages of cooperative firms such as their lack of economic efficiency. It is argued that this lack of efficiency is due to the ownership and control structure and the focus on mutual cooperation of cooperative firms. These authors rarely consider in their analysis the positive aspects of cooperative firms (Novkovic 2008) such as their strong associative element (Jones and Kalmi 2009) and their ability to minimize negative market externalities and create social capital (Craig and Pencavel 1992, 1993; Jones and Kalmi 2009; Maietta and Sena 2008; Monzón et al. 2009; Novkovic 2008; Pencavel et al. 2006; Pérotin 2006; Vitaliano 1983). The consideration of alternative approaches allows us to rethink the opportunities of cooperative firms in terms of improving the well-being of people.
The approach we take in this article not only constitutes quite a departure from previous neoclassically oriented approaches but also extends other approaches to modeling cooperative firms by proposing an entirely novel approach. In order to introduce this fundamental distinction, let us quote Hart (2011) and the question he posed “as to whether the study of organizations should be based on an objective function common to different organization forms or whether different organization forms should denote different objective functions.” We answer this question by taking the latter position and go even further by proposing that even within a given organization form different objective functions should often be implemented not only for cooperative firms but also for other organization forms.
Based on recent contributions in the area of cooperative firms (Borgen 2004; Burdín and Dean 2012; McCain 2008; Ostrom 2000, 2002; Tabellini 2006), we put forth a generic model of cooperative governance. This generic model is able to generate different classes of cooperative governance that implement the fundamental principle of cooperative participation in different ways. Thus different generic classes of cooperative governance can be defined in the model depending on the different ways in which they implement a bottom-up, democratic approach toward strategic decision-making. Our model is able to accommodate a wide variety of criteria for strategic decision-making in cooperative firms and is generic enough to include different sets of criteria that go above and beyond maximizing individual economic profit. We also show how this formal model of cooperative governance is flexible enough to accommodate different governance structures of cooperative firms by allowing the definition of different sets of criteria often found in a wide variety of cooperative firms and by accommodating different rules for cooperative decision-making.
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3. Governance, employment and human resource management
